Predation is a major threat the economic viability of livestock operations. In the case of sheep operations in particular, predation by coyotes (Canis latrans) has long been cited as a primary driver of economic vulnerability and a major cause of producers leaving the business altogether. U.S. Department of Agriculture death loss reports confirm that coyotes are responsible for more than half of predator-related sheep losses and nearly 64% of predator-related lamb losses.   

As opposition and regulatory impediments have mitigated the lethal control options available to livestock producers, an increasing number of sheep operations have incorporated an extensive suit of non-lethal depredation tools. Livestock guardian dogs (LGDs) are one of the most common of these tools. While there is a general consensus (among the scientific literature and producers alike) that LGDs are effective at reducing coyote predation, before now there has been very little research done to compare the benefits and costs of LGDs. 

To consider this question, we used data collected from the Hopland Research and Extension Center (HREC) sheep research flock from 2013 – 2017. Throughout the study period, the flock consisted of an average of 459 ewes (breeding females).  Like most commercial sheep operations in California, HREC was dependent on rain-fed, pasture-based forage for the majority of its feed and used a “mob-” type rotational grazing strategy to utilize available forage. Coyote predation at HREC was a chronic and documented problem. Large pastures, coupled with densely vegetated terrain, have always made utilizing the available grazing area at HREC a challenge; during the study period, the flock was only able to graze on  less than 50% acres due to predator pressure from coyotes.

A typical reproductive schedule was followed at HREC to produce feeder lambs for market—ewes were bred in July with most lambs born in December and January. Lambing occurred in a barn with ewes and lambs kept together in individual pens inside the barn for about 2 days before being turned out together on pasture. Lambs were typically weaned and sold as feeder lambs in May each year. Flocks were checked daily but were not accompanied by a herder. 

LGD Economic Evaluation 

The general approach to the economic valuation had 3 steps. First, we quantified the present value of the reduction in predator-associated losses that could be attributed to LGD protection. Second, we estimated both the fixed (i.e., investment) and variable (i.e., maintenance) costs associated with the use of LGDs as a non-lethal depredation tool. Third, we combined the benefit and cost information to identify conditions under which using LGDs were cost-effective. 

Confidential data from HREC used in this analysis consisted of 4 years of detailed production and cost data related to the operation and management of the breeding flock. This facility was regularly used for research purposes, so each animal was tagged and tracked such that it was known which lambs were born to which ewes; this enabled us to accurately measure reproductive rates as well as losses due to both coyotes and natural causes. 

Given lamb weights and market values available in these data, we estimated revenues associated with both ewes and lambs to paint an accurate picture of changes in net profits due to anticipated changes in flock size. Detailed cost data on feed, fencing, veterinarian expenses, and labor costs allowed us to estimate all costs associated with LGD use. 

Prior to the 2013/14 marketing year, there were no LGDs being used by HREC. This provides a “base” or “pre” period that can be used for comparison. We use this base period to determine what predation rates were likely to be without LGDs. The subsequent marketing years in our data (2014/15 – 2016/17) were used as our “treatment” period where LGDs were in place and reductions in predation, if any, were quantified relative to the base period. Throughout the analysis we use a flock consisting of 500 ewes and a reproductive rate of 1.12 to isolate the effects of LGDs. Because the literature suggests that LGD efficacy is achieved with 1 dog per 100 ewes, we model the scenario using 5 LGDs. 

Results

Benefits

The primary benefit associated with using LGDs as comes from the ewe and lamb losses that were avoided. We estimated that the deployment of LGDs reduced lambs lost to coyotes by 43% each year at HREC. With a breeding ewe flock of 500 and reproductive rate of 1.12, LGDs are anticipated to reduce lamb predation by 27 head per year. During the study period, the average sale price for feeder lambs was $1.37/lb and lambs were sold at an average weight of 65 lbs. Thus, savings from reduced lamb predation were estimated to be $2,404 per year. We also found that the deployment of LGDs corresponded to a drop in ewe predation of 25% per year, or four ewes each year. HREC sold running age ewes, i.e., females incorporated in commercial breeding flocks, for an average price of $244.75 per head; estimated savings totaled $979 per year. 

Given that LGDs are investments that have an average useful life of seven years, we must calculate all expected future benefits associated with LGDs over that time period with appropriate adjustments for the time value of money. The present value of the total anticipated savings associated with reduced lamb and ewe predation over the seven-year horizon was estimated to be $16,200, given our 3% discount rate. 

Estimated Costs

LGDs are considered capital investments that depreciate over time. While puppies are less expensive to purchase initially, they involve substantially higher costs to train and are not effective immediately. For our analysis, we assumed dogs were purchased as puppies for $400 each for a total initial investment of $2,000 for five pups. We assumed these young LGDs were not effective at reducing predation in their first year and only 50% effective during their second year. 
Evidence suggests that 45% of LGDs died or were put down during their useful life, with the risk being higher for pups. Assuming the mortality rate for each LGD in a given year was 11% if younger than 38 months and 5% if 38 months or older, then the present value of expected total replacement costs would be $728. Maintenance costs for LGDs include dog food and veterinary expenses. During the study period, veterinarian costs averaged $210 per dog per year and food averaged $654 per dog per year. In total, the discounted present value of anticipated costs associated with using five LGDs as a non-lethal depredation tool over the investment’s useful life totaled $29,612. 

Net Present Value and Additional Considerations

We estimated the discounted stream of future expected net benefits to assess the economic viability of investing in LGDs and found that costs exceeded benefits by a total of $13,412 over the seven-year period. This translates to a benefit/cost ratio of about 0.55. However, this result cannot be viewed in isolation as the experience at HREC may not be representative for many commercial production scenarios. 

HREC may have experienced lower efficacy rates than one may expect on the typical commercial sheep operation in the Western U.S. Past surveys on the effectiveness of LGDs have shown 68% of respondents reporting that LGDs eliminate predation entirely. If this were the case and we recalculate the model for this scenario, a total of 65 lambs and 12 ewes would have been saved by LGDs from coyote predation, relative to the pre-control baseline. Thus, savings from reduced lamb and ewe predation would be $5,788 and $2,937 per year, respectively. Under these conditions, the present value of benefits would exceed the costs by $12,164 over the seven-year period, equivalent to a benefit-cost ratio of 1.41. 
The results reported here are also dependent upon other changing factors such as lamb prices, ewe prices, LGD feed costs, etc. To the extent that these prices change over time, so too will the cost-benefit ratio of LGDs.